U.S. Steel weighed by stock offering, over-levered balance sheet

U.S. Steel (NYSE:X) -13.6% pre-market following news of its 50M-share offering - nearly a third of its current shares outstanding - likely at $8.58-$8.80 per share. KeyBanc analyst Philip Gibbs reiterates his Sector Weight rating but expects the stock to sell off today, telling Bloomberg that the company has a "strategic objective of taking Big River down and want to make sure with 150% accuracy that they can get through this time period. They weren't bashful about what they needed in October to go after Big River, they don't have any money and they're going to have to go out and find ways to get it." Citigroup, which rates U.S. Steel at Neutral, says it "expect(s) a negative reaction to this announcement, especially given that X shares are only down 8% YTD." BMO Capital says an equity raise "was becoming increasingly obvious... after the May debt transaction, given balance sheet leverage," and warns another equity raise is not out of the question given the company's over-levered balance sheet.